Uzbekistan's Transition to Inflation Targeting
IMF Working Papers, November 18, 2022
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- Uzbekistan's Transition to Inflation Targeting
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Bibliographic details
- Authors: Moayad Al Rasasi, Ezequiel Cabezon
- Published: November 18, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400224584.001
Overview
- Uzbekistan has significantly improved its monetary policy framework during 2017-21.
- The transition to inflation targeting is challenging because the country is going through a period of deep structural reforms.
- The Central Bank of Uzbekistan (CBU) will have to monitor structural reforms and calibrate monetary policy accordingly.
Research focus and methods
- Identifies institutional and structural gaps and assesses the effectiveness of monetary policy transmission.
- Institutional gaps are assessed using institutional indexes.
- Transmission is assessed using VARs.
Key findings
- Reforms during 2017-21 materially strengthened the monetary policy framework.
- Structural reforms underway create additional challenges for adopting inflation targeting.
- The effectiveness of monetary policy transmission has been evaluated but remains constrained by institutional and structural factors.
- The paper concludes that in the coming years, reforms will need to continue to:
- further improve the CBU’s governance and independence,
- develop financial markets,
- reduce the still large footprint of the state in the financial sector as well as in the overall economy.
Policy recommendations
- Continue reforms to strengthen CBU governance and independence.
- Develop financial markets to support transmission under an inflation-targeting framework.
- Reduce the large state footprint in the financial sector and the broader economy to improve policy effectiveness.
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- Working Paper